SYDNEY- Asian share markets were tense on Thursday and the dollar held on to its overnight gains before the big test of a US consumer inflation report, while market sentiment took a dive as the likely collapse of a major crypto exchange spooked investors.
With no final results available from the US mid-term elections, investors were turning to the upcoming inflation data later in the day, which are likely to show a decline in both the monthly and yearly core numbers for October to 0.5 percent and 6.5 percent, respectively, according to a Reuters poll.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 0.6 percent in early trade, dragged lower by outsized declines in China’s bluechips and Hong Kong’s Hang Seng index.
Japan’s Nikkei lost 1 percent.
China is again grappling with a COVID surge, with the southern metropolis of Guangzhou reporting thousands of cases. Apple Inc AAPL.O supplier Foxconn 2317.TW plans to update its fourth-quarter outlook on Thursday, after strict COVID curbs remained in place at its major plant in China despite the lifting of a lockdown.
Elsewhere, focus remained squarely on inflation.
“While inflation globally has peaked, the cooling is not sufficiently large or broad-based to bring rate hiking cycles to a convincing conclusion, in our view,” said analysts at J.P. Morgan.
Still, some central banks in both developed and emerging markets had become dovish as they worried about monetary tightening pushing down economic growth, the analysts noted.
The futures market currently shows investors believe the target US federal funds rate will peak around 5.1 percent by next June, and the chances of a rise of 50 or 75 basis points are tilted in favour of a half-point increase next month.
Overnight on Wall Street, shares ended lower as Republican gains in midterm elections appeared more modest than some had expected. Republicans were still favored to win control of the House of Representatives but key races were too close to call. — Reuters
